Rule Against Perpetuities

advertisement

An interest is not good* unless it must
vest**, if at all, not later than 21 years after
some life in being*** at the time of the
creation of the interest, plus a period of
gestation.
 * good = valid
 ** vest = “touch” the owner:
▪ Born,
▪ Ascertained, and
▪ No conditions precedent
 *** life in being = alive; born but not yet dead
All of the following must be true for RAP to
apply:



Future interest (not present interest),
Partially or totally contingent (not totally
vested), and
Held by a non-charitable transferee (not an
interest the grantor retained).
Thus, if you classify an interest as one of
the following, you must check for a RAP
violation:



Contingent remainder,
Vested remainder subject to open, and
Executory interest (including a trust).
No other interests require a RAP analysis!!

The violating interest is void from moment
of creation.

Read grant as if the violating interest is not
there.

Analyze grant from date of creation:
 Deed = when the grantor executed the deed
 Will = when the testator died

If any hypothetical fact pattern could
violate RAP, then RAP is violated,
regardless of how unlikely it is to happen.
 No one is ever too young or too old to have
children.
 No one’s death is imminent regardless of how
old or ill.

5:00 a.m. = interest created
 Deed delivered, or
 Testator dies

6:00 a.m. = all lives in being give birth to a healthy
baby.

Noon = all lives in being die but were successful in
saving all of the babies born earlier in the day.

At 12:01 p.m., do you know for sure that the
interest will vest (or not vest) by the end of the next
21 years?
 If yes = RAP not violated; interest is OK.
 If no = RAP is violated; interest is void

1. Classify interests as written.

2. See if RAP applies to each interest.

3. If yes, apply RAP analysis.

4. If RAP violated, strike out interest.

5. Reclassify and repeat.

Contingent remainder,

Vested remainder subject to open, and

Executory interest (including a trust).
No other interests require a RAP analysis!!

1. Classify interests as written.

2. See if RAP applies to each interest.

3. If yes, apply RAP analysis.

4. If RAP violated, strike out interest.

5. Reclassify and repeat.

5:00 a.m. = interest created
 Deed delivered, or
 Testator dies

6:00 a.m. = all lives in being give birth

Noon = all lives in being die, but all 6:00 a.m. babies
live

At 12:01 p.m., do you know without doubt that the
interest will vest (or not vest) by the end of the next
21 years?
 If yes = RAP not violated; interest is OK.
 If no = RAP is violated; interest is void
“To A and his heirs for so long as no liquor is
consumed on the premises.”
“To A and his heirs for so long as no liquor is
consumed on the premises, but if liquor is
consumed on the premises, then to B and
her heirs.”
“To A and his heirs as soon as liquor is sold on
the premises.”
“To A for life and then to those children of A
who attain the age of 25 and their heirs.”
 No child has attained age 25.
“To the American Red Cross, but if the land is
not used for hospital purposes, then to The
Texas Tech University School of Law.”
“To A for life, then to A’s children for their
lives, and then to A’s grandchildren and
their heirs who are living when A’s last
surviving child dies.”
 A has two living children, X and Y.

1. Wait and see

2. Expand time period

3. Reformation using cy pres

4. Uniform Statutory Rule Against
Perpetuities
 90 year period
 Runs from date of grant (rather than death of
lives in being)
 Wait and see
 If still violates, mandatory reformation

5. Repeal
“Perpetuities * * * are contrary to the genius of a
free government, and shall never be allowed
* * * .”
(a) Within the limits of [RAP] a court shall reform or construe an
interest * * * that violates the rule to effect the ascertainable general
intent of the creator of the interest. A court shall liberally construe and
apply this provision to validate an interest to the fullest extent consistent
with the creator's intent.
(b) The court may reform or construe an interest * * * according to the
doctrine of cy pres by giving effect to the general intent and specific
directives of the creator within the limits of [RAP].
(c) If an instrument that violates [RAP] may be reformed or construed
under this section, a court shall enforce the provisions of the instrument
that do not violate the rule and shall reform or construe under this
section a provision that violates or might violate the rule.
(d) This section applies to [interests] conveyed by an inter vivos
instrument or a will that takes effect on or after September 1, 1969, and
this section applies to an appointment made on or after that date
regardless of when the power was created.

“If a court of proper jurisdiction finds that
this trust violates the Rule Against
Perpetuities, the remaining trust property
shall be distributed to [Beneficiary].”
“every first-year law student’s worst
nightmare”
Download